BOSTON
— There was a time in America when a swamp was viewed as little more than a waterlogged wasteland. Certainly nothing that a bulldozer couldn't cure.

But after generations of education and environmental awareness, many Americans now acknowledge the importance of marshes, bogs, and meadows as filters for water and havens for wildlife.

Now a federal court decision is setting the stage for a landmark fight over the possible ditching and draining of thousands of acres of wetlands across the country. Where backhoe meets bulrush has once again become one of the hottest battlegrounds between environmentalists and developers.

On one side are conservationists seeking to protect clean water and wildlife habitat. On the other are landowners and builders who want to construct homes, stores, and offices on private property without facing expensive and time-consuming government regulations.

At issue is the scope of federal power to regulate certain development activities on privately owned wetlands. A federal appeals court in Washington ruled last year that the Environmental Protection Agency and the US Army Corps of Engineers exceeded their authority by requiring developers to obtain permits before conducting certain kinds of excavation work on wetlands.

The ruling has opened what environmentalists Bulldozers versus bulrushes: new clash over wetlands

argue is a major loophole that has left once-protected wetlands vulnerable to development and destruction. It also raises the prospect of years of litigation. And it points up a lack of congressional consensus in this murky area of environmental law.

Developers say that dire warnings by conservationists of widespread wetlands destruction are exaggerated. They say the court ruling merely restores the state of wetlands regulation under the federal Clean Water Act to the level set by Congress more than a quarter-century ago.

"When Congress passed the Clean Water Act, it was not intended to be a comprehensive wetlands-protection act. Essentially, it is a pollution-prevention statute," says Duane Desiderio of the National Association of Home Builders.

Agencies like the EPA and the Corps of Engineers were restricting wetlands development through regulations written by the agencies themselves that went far beyond the intent of Congress, says Mr. Desiderio.

Environmentalists disagree. They say the intent of Congress was to protect the nation's water supply. To do that, they say, wetlands must also be protected.

"Wetlands are important. They have a filtering capacity," says Derb Carter, a North Carolina-based lawyer with the Southern Environmental Law Center. "They actually remove pollutants from water prior to polluted water reaching a stream or river."

They also provide habitat for fish and animals and help control flooding. "They are in essence natural sponges in the landscape that retain storm water and prevent downstream flooding," says Mr. Carter.

At the center of the debate over the federal regulations is a narrow legal issue of what constitutes a discharge of a pollutant into a wetland. The Clean Water Act restricts any such discharge, including attempts to drain a swamp by digging a drainage ditch through the center of it and piling the spoils along the bank. The regulation is aimed at preventing water pollution through runoff from the dredged material.

To get around this regulation, some developers avoid any possibility of runoff by trucking all dredged material to a site not in the wetland.

Alarmed at the prospect of unregulated destruction of wetlands, environmental groups sued the EPA and Corps of Engineers to force them to stop the developers.

The agencies responded by writing a new regulation that said anyone digging such a ditch in a wetland must first apply for a federal permit. The agencies reasoned that a permit was necessary under the Clean Water Act because even the smallest amount of dredged material might fall out of a backhoe bucket and into the water. The theory was that such "fallout" material is a kind of pollutant.

Builders sued. In its ruling last year, the federal appeals court agreed with the developers and said that if environmentalists and the Clinton administration wanted the Clean Water Act to become a comprehensive wetlands-protection law, the act itself must be amended by Congress.

The court ruling results in an anomaly. The law clearly requires a permit for wetlands ditching operations that pile dredged material beside the ditch in the wetland. But if a developer digs the same ditch and trucks the material off site, no permit is required.

To critics, it sets a dangerous precedent that could lead to extensive destruction of wetlands. "This case has blown a major hole in [federal agencies'] regulatory authority," says Carter.

Federal rules don't bar any or all development in wetlands, says Grady McCallie of the National Wildlife Federation. They just require that ditching operations be subject to the same regulatory process as other wetlands-development efforts causing the same impact on the water system, he says.

Wetlands protection is not a high priority with Congress. No move is under way to expand regulatory authority, says Bonnie Nevel, editor of the National Wetlands Newsletter.

Thus environmentalists are considering stepping up their lobbying for more wetlands protection locally. States have broad authority to protect such areas, and many state laws, like those in Maryland and Massachusetts, are at least as strong if not stronger than federal regulations.